Rolled Over Roth

Today TaxMama hears from Michael who’s got a problem. “Currently, I have a Roth IRA account with Fidelity and want to switch to another financial institute. But I’ve been told there is a fee to do that. I am wondering if there is any do-it-yourself way to transfer my Roth IRA without incurring the early withdrawal penalty from IRS?”

Dear Michael,

I am not clear on the problem.

Open a Roth IRA in the institution of your choice.

Then instruct Fidelity to transfer the funds to the new account. Since it’s a direct rollover, there should be no withholding for taxes. Your 1099-R should show a code for a rollover next year.

But there will probably be at least a small fee from Fidelity for the administrative costs, usually around $5 or $10..

Depending on what kind of investment you have with Fidelity, there may be other fees within that account when you close it. That has nothing to do with it being a Roth or an IRA. It has to do with the contract you signed with Fidelity.

Read the specifics on your account and discuss it with Fidelity’s customer service folks.

And remember, you can find answers to all kinds of questions about IRA rollovers, and other tax issues, free. Where? Where else? At TaxMama.com

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